Correlation Between Smallcap and Qs Small

Can any of the company-specific risk be diversified away by investing in both Smallcap and Qs Small at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Smallcap and Qs Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Smallcap Sp 600 and Qs Small Capitalization, you can compare the effects of market volatilities on Smallcap and Qs Small and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Smallcap with a short position of Qs Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap and Qs Small.

Diversification Opportunities for Smallcap and Qs Small

0.92

Correlation Coefficient

Smallcap  Qs Small

Almost no diversification

The 3 months correlation between Smallcap and LMBMX is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Sp 600 and Qs Small Capitalization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Small Capitalization and Smallcap is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Smallcap Sp 600 are associated (or correlated) with Qs Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Small Capitalization has no effect on the direction of Smallcap i.e., Smallcap and Qs Small go up and down completely randomly.

Pair Corralation between Smallcap and Qs Small

Assuming the 90 days horizon Smallcap is expected to generate 2.3 times less return on investment than Qs Small. But when comparing it to its historical volatility, Smallcap Sp 600 is 1.02 times less risky than Qs Small. It trades about 0.07 of its potential returns per unit of risk. Qs Small Capitalization is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,378  in Qs Small Capitalization on July 22, 2025 and sell it today you would earn a total of  162.00  from holding Qs Small Capitalization or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Smallcap Sp 600  vs.  Qs Small Capitalization

Smallcap Sp 600

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Smallcap Sp 600 are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Smallcap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Qs Small Capitalization

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qs Small Capitalization are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Qs Small may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Smallcap and Qs Small

The main advantage of trading using opposite Smallcap and Qs Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap position performs unexpectedly, Qs Small can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Qs Small will offset losses from the drop in Qs Small's long position.

The idea behind Smallcap Sp 600 and Qs Small Capitalization pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.